By Kevin Lee
Within certain marketing circles, the term “performance marketing” is equated with affiliate marketing and therefore associated with lots of unnecessary baggage (much of it unwarranted). However, when considered as a digital marketing layer, the term “performance programmatic” becomes more useful and more instructive in terms of describing where it fits into the performance marketing ecosystem as well as the overall marketing ecosystem.
It takes resourceful CMOs and senior marketers, ones comfortable with math (an area often under-emphasized by universities training marketers on the “creative” side) to move budgets where they work hardest, both short term and long term.
In addition to media buying considerations, CMOs need to make sure messaging and positioning are resonating with their target audience(s). So, it’s not just the media plan and the earned media marketing plan that influence success (or failure), but also the positioning and the creative messaging.
Since digital marketing silos (client-side, ad-platform-side and externally) aren’t going away anytime soon, affiliate marketing has been extremely resilient — even if the affiliate publisher sometimes gets credit it doesn’t deserve.
I recently had a conversation with a veteran in digital marketing (and a friend) regarding the future prospects of affiliate marketing platforms and publishers. Here’s a synopsis of a recent conversation with him. Though I know it’s the opposite of how most Q&As are organized, I’m the one answering.
1. Is affiliate marketing actually incremental to traditional marketing or is it cannibalistic?
In my experience, the answer is “marginally incremental,” when measured within the online-only ecosystem (affiliates, of course, get no credit for offline conversions and mobile conversions can be tricky too). As a general matter, affiliate platforms are measured in their own silos, so, using a cookie example, display, search and affiliate often all claim credit for the conversion.
While each may have been very or somewhat influential, attribution is difficult and often executed poorly. Lousy attribution models are generally not predictive of optimal budget shifts in an auction media marketplace where media price-to-volume ratios of elasticity are very different (for example, search is inelastic; display more so).
The trick is to understand what incremental value affiliate marketing is adding at the channel and publisher level (in the case of larger publishers). This sometimes requires entirely shutting off affiliate channels to properly test marginal value because — in addition to the value captured by the click and conversion — affiliate impressions deliver value too, and those are rarely factored into attribution models.
Sometimes when a merchant changes affiliate networks they use this break to do a test.
2. Have you found that customers gained through affiliate programs are of quality lifetime value (LTV)?
Generally, I find they have a lower LTV, because if a marketer or agency is controlling the media buy (SEM, Social, Display, etc.) one has the ability to hone one’s messaging to target one’s highest LTV audiences. In that situation, you can employ all of the targeting variables at your disposal, including geography, dayparts, OS and whatever demographic or behavioral data you can use, whereas you lack that control with …read more
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